EU Mulls Subsidising Industry To Cope With Renewables Burden

  • Date: 18/03/14
  • The Sydney Morning Herald

The European Union is considering allowing state aid to 62 energy-intensive industries including aluminium- and petroleum-product manufacturers to help with the cost of boosting renewable energy, a draft EU document showed.

The European Commission, the EU regulatory arm, will approve support in the form of reductions in environmental taxes if the beneficiaries cover at least 20 per cent of the additional costs, according to state-aid guidelines for 2014-2020 obtained by Bloomberg News.

The document, to be adopted by the commission on April 9, will define state-support rules to help spur renewables as nations including Germany call for permission to use tools that would shield industry from rising power bills during the EU shift to a low-carbon economy.

“The aid should be limited to sectors that are exposed to a risk to their competitive position due to the burden resulting from the funding of support to energy from renewable sources as a function of their electro-intensity and their exposure to international trade,” the commission said in the draft document.

Governments will also be allowed to extend state aid to sectors that have electricity intensity, or power costs as a proportion of overall costs, of at least 25 per cent and trade intensity of at least 4 per cent, according to the draft guidelines. The aid could be granted in the form of a reduction from charges or as a lump sum paid to the beneficiary in the year when the costs are incurred or in the following year, the commission says.

Levies, taxes

The own contribution of state-aid beneficiaries may be further reduced to 5 per cent or even to 2.5 per cent of renewable surcharges for companies whose electricity intensity is more than 20 per cent, according to the draft. The commission has not specified how electricity intensity will be calculated.

Levies and taxes linked to renewable energy have added to an increase in EU energy costs, with household electricity prices rising 4 per cent a year on average in 2008-2012, according to analyses by the commission. As a part of its 2020 energy and climate strategy, the EU has legally binding targets to cut carbon emissions by 20 per cent and increase the share of renewables in energy consumption to an average of 20 per cent.

In Germany, the aid to help boost renewables is paid for with a levy on customer bills, driving up power prices to the highest in the EU after Denmark. To ease costs for businesses, large energy users have received power-fee rebates, sparking a probe by the EU.

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